It's a risky business: aid and new approaches to political risk management

From the late 1990s onwards, governance and institutions have emerged as a leading concern in international assistance circles. There is growing recognition that the challenge of development, including the effective delivery of core public goods and services, is not so much what needs to be done (be it to build schools or provide vaccinations) but, crucially, how it is done (processes that facilitate or obstruct change). Yet, despite increased awareness that politics and context matter, their operationalization remains a crucial challenge. One important element of this is the lack of systematic understanding of the relationships between political, governance and institution-building processes, and the implications for development outcomes. This paper looks at the different ways in which the international community has sought to understand, assess and manage political risks, and explores some of the constraints for incorporating political risks in donor policy and practice. It argues that aid needs to be made smarter and politically savvier, and develops some ideas to embed political risk assessment and monitoring more as a core component of the day-to-day work of aid agencies.